Sen. Flores: Insurers ‘smearing’ me because I don’t take their orders

Insurance companies are “smearing” her, said Sen. Anitere Flores, R-Miami, after her committee on Monday passed a bill, SB 1218, that they did not like.

Sen. Flores

“Not only is the insurance industry smearing someone who has always fought for consumers because she won’t just do what they say, they are pushing hard for rival bill SB 1038 — a bill they themselves helped craft,” Flores said in a statement. “However, this bill does nothing to guarantee property insurance rates will decrease, and it hinders consumers’ ability to protect themselves when insurance companies take advantage of them.”

Florida insurance companies got the topic they wanted in the spotlight this week.

Just not the bill.

The topic is their top priority: high costs on claims such as plumbing leaks or roofing problems that they blame on unscrupulous contractors and attorneys. A bill to deal with that cleared the Florida Senate’s banking and insurance committee Monday, but it was not one they liked.

SB 1218 by attorney and state Sen. Gary Farmer, D-Ft. Lauderdale, passed 7-2. It would license water clean-up contractors for the first time and put certain restrictions on “assignment of benefits.” That happens when a contractor says, in effect, I’ll clean up the water here at 3 a.m. if you sign this form, and I’ll deal with the insurance company for you if you sign over control of the insurance benefits to me.

The mere mention of the letters AOB triggers pained looks in many insurance circles, though it can be difficult to sort out genuine problems from hype to sway legislators. Florida’s largest insurer Universal Property & Casualty Insurance Co., recently told stock analysts the severity of its AOB claims has been falling for a couple of years. State-run Citizens Property Insurance Corp. blamed AOB for a $27 million loss in 2016 but also spent $181 million on optional offshore reinsurance that did not pay any claims.

Among other things, the bill says assignments must be limited to the work at hand and must disclose the scope of work performed, and the consumer can rescind the agreement within five days under certain conditions.

But insurers say a big problem driving up rates in South Florida is that some contractors are abusing the system in cahoots with attorneys — and taking advantage of Florida rules such as a “one-way” attorney-fee provision that makes insurers pay big legal costs if they don’t win in court.

SB 1218, though, offers a different solution to rising consumer rates: it says insurers can’t pass on such legal costs to consumers when the company loses in court. The money would have to come out of the insurance company’s profits.

Any legislation needs to address this “major incentive” for abuses, Altmaier said.

Florida’s insurance consumer advocate, Sha’Ron James, said she supported the overall bill for its consumer protections but expressed concern about going too far by barring insurers from passing on certain legal costs in rates. What looks like a “short-term” positive for consumers could quickly turn into a negative if a significant number of insurers refused to write policies in Florida or settled claims at inflated costs just to avoid the risk in court, she said. That merely drives up rates also in the long run, she said.

“Without addressing one-way attorney fees, lawsuits will continue to go up,” said Edie Ousley, spokeswoman for the Consumer Protection Coalition, a group funded by business and insurance interests. “At the end of the day, that costs homeowners more and makes the cost of homeownership more expensive.”

Insurance industry groups support other bills that have been filed, but the question is what legislation is likely to get to House and Senate floors after years of stalemate on the issue.

At the hearing, Flores said she was “disappointed” opponents did not try to amend the bill if they don’t like it. Switching to another insurance topic, she brought up a vote she made for 2012 reforms to Personal Injury Protection car insurance that were supposed to bring down consumer costs down but clearly failed to do so as advertised, in her view.